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Paul Krugman is the jew elites appointed conman, to con americans middle class to accept the current US Federal Reserve bank policy of super lower interest rate.|
Thursday, March 29, 2012
Michael Hudson on the Federal Reserve System
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City and a research associate at the Levy Economics Institute of Bard College
What is the place of the Federal Reserve System in the American financial and economic structure?
Prior to the Federal Reserve’s founding in 1913, U.S. monetary policy was conducted by the Treasury. Like the Fed, it had district sub-treasuries that performed nearly all the financial functions that the Fed later took over: providing credit to move the crops in autumn, managing government debt, and so forth.
But after the severe 1907 financial crisis, a National Monetary Commission was reformed. Under the then-Republican administration, it recognized a need for more active government intervention to prevent future financial crises. It also recognized the desirability of moving away from the Anglo-Dutch-American system of “merchant banking” based on short-term lending against collateral in place, or for shipping of goods already produced. The National Monetary Commission’s longest volumes were on the great German industrial banks, and Republican policy aimed at bringing banking into the industrial era, to provide long-term funding after the model of German and other Central European banks.
However, the leading bankers sought to use the crisis as an opportunity to grab power for Wall Street, away from the Treasury. In this sense, the Fed was founded in large part to take monetary control away from Washington’s elected officials and appointees, and privatize the supply of money and credit.
So its place in the U.S. financial and economic structure is to allocate credit, primarily to serve Wall Street financial interests. That explains the insistence on the financial class here and abroad in insisting on an “independent” central bank.
It means that instead of serving the public interest, it serves the interests of the banking class. The hoped-for transformation of commercial banking into long-term industrial banking was not achieved.
The Federal Reserve is private in name only. Its heads are appointed by Washington, but Wall Street has veto power over it (as it has over the appointment of major Treasury and other regulatory agency officials). So the problem is not that the Fed is technically owned by its stockholders, but that Wall Street has gained overpowering control over government itself.
The financial sector has sought to dismantle checks and balances, making it protect Wall Street even as financial interests diverge from the promoting of economic growth and rising living standards.
Under Mr. Greenspan’s tenure and that of his successor, Ben Bernanke, the Fed has overseen the greatest shift of wealth n American history since the Robber Barons.
Finally, the Fed has taken over the functions of government by threatening to close down the economy if the government does not bail out the banks at taxpayer expense, and protect the wealthy 1% against losing money.
R Foreman says:
March 29, 2012 at 2:03 am
Somehow I don’t think Bernanke was successful at pulling ‘real estate prices out of negative equity’. I suspect those prices will continue falling to a point where people can pay cash for homes.
Bernanke and the Treasury+Political/Financial elite have pitted themselves diametrically against the 99%. It’s really just a question of time before the sovereign debt bubble blows.
What happens then is anybody’s guess.. probably something similar to the 1789 French Revolution, or perhaps a Syria-like crackdown and blood-letting. The difference here is that the populace is well armed, but still, it will be somewhat disorganized mayhem. The US military will be the largest gang with the biggest guns.